GBP/USD Forecast: Downtrend resistance limits any recovery despite OK data

GBP/USD trades around 1.3100 after the UK jobs report met expectations.
Internal Brexit talks continue as the EU shows exasperation from the topic.
The technical picture is becoming bearish for the pair.

Yohay Elam FXStreet

GBP/USD is trading just under 1.3100 once again, sticking to familiar ranges. The unemployment rate remained at 3.9% in February as expected. Average earnings rose by 3.5% including wages and 3.4% excluding them. These numbers met expectations and are a repeat of January's figures. No less importantly, they are satisfactory figures.

As usual with UK jobs reports, the more up-to-date Claimant Count Change is the soft spot. Jobless claims rose by 28.3K in March, higher than 20K expected. Despite the ongoing rise, it has yet to affect the jobless rate.

The labor data seems to be detached from uncertainty about Brexit. The talks between the government and the opposition continue, without any reports about breakthroughs. Europeans are becoming exasperated about the topic. European Commission President Jean-Claude Juncker is happy to have a "Brexit Break" and talk about "happier topics."

European Council President Donald Tusk says the extension of Brexit until October 31st is flexible, but some do not want to drag it on for years. Tusk counted the UK in the list of 28 nations that he called on to support the rebuilding of the Notre Dame cathedral in Paris. Does he see the UK staying for longer?

In the US, FOMC member Charles Evans said he sees low interest rates until late 2020 and opened the door to rate cuts. His colleague Eric Rosengren maintains a positive view of the US economy. Industrial output data is due later in the US.

All in all, markets remain calm in the short Easter week, but any news from the talks between Britain's largest parties is of interest.

GBP/USD Technical Analysis

GBP/USD is trading under the downtrend resistance line that accompanies it since mid-March. Attempts to move above it have failed so far, showing the resilience of the line. It finds support above the 50 Simple Moving Average on the four-hour chart. Momentum is slightly to the downside and also the Relative Strength Index is leaning lower.

Support awaits at 1.3050 that held the pair last week. Further down, 1.3030 provided support in the previous week. 1.2985 was April's low and 1.2960 was the trough in March.

Resistance awaits at 1.3120 which capped the pair several times in recent weeks. 1.3200 is a round number and the high point in April. It is followed by 1.3270 which was a stubborn cap in late March.

Author

Yohay Elam

FXStreet

Yohay is in Forex since 2008 when he founded Forex Crunch, a blog crafted in his free time that turned into a fully-fledged currency website later sold to Finixio.

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